Stories about difficult trade experiences are commonplace in Africa--so much so that it is easy to overlook the very damaging impact that trade barriers can have on businesses and investor confidence. The implications for domestic businesses, which have to battle with delays and high costs just to import or export their goods, are profoundly damaging and do little to inspire innovation or expansion.
Why should farmers or manufacturers try to increase their yield, diversify their lines or consider innovation if they know efforts to expand their business beyond their country's borders will be thwarted with problems and delays? Similarly, the perceptions of foreign investors are shaped by their experiences of doing business in a country. Lengthy and inefficient exporting and importing procedures understandably tarnish investors' opinion of a country and lead them to look elsewhere.
In today's economic climate, when competition for investment is becoming tougher than ever before, removing such hurdles to doing business becomes even more urgent. If Africa is to be taken seriously as a global trading player, governments need to address the fundamentals to doing business, including modernising and increasing the efficiency of the continent's trade and customs procedures. The reasons behind Africa's formidable trade barriers are multiple, ranging from excessive red tape and paperwork, unnecessarily high numbers of physical inspections of goods, poor IT systems and inadequate physical infrastructure. Delays can also occur because systems are outdated and unable to cope with an increase in trading activity.
For example, the East African Community has enjoyed robust economic growth in the last five years, averaging 5.6% growth per annum. However this growth has led to congestion and overcrowding in many areas, with some customs systems grinding almost to a halt.
Eighty per cent of East Africa's trade depends on the imports and exports that pass along the Northern Corridor between Mombasa and Kigali, and the Central Corridor between Dar es Salaam, Kigali and Bujumbura.
These corridors carry the lifeblood of EAC partner states, especially for landlocked Uganda, Rwanda and Burundi, but passage along them can be severely hampered by delays at ports, on roads and at border posts.
Prohibitive transport costs
Truck journeys through the Central Corridor can typically take four to six days and each day's delay for a typical truck costs...